Liam Dann 's Opinion

Business editor of the NZ Herald

Liam Dann: TV war not so fierce in real world

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Sky provides reminder that social change doesn’t always keep up with the pace of technological change.

 Game of Thrones  has been a hit with fans and a boost for Sky TV.
Game of Thrones has been a hit with fans and a boost for Sky TV.

Everyone is talking about TV wars and the rise of internet TV.

But Sky TV's big result on Friday was a reminder that while we can all see the future, real profits live in the present.

The changing nature of television makes a lively conversation. Peppered with references to hit shows like Game of Thrones, it's a watercooler topic which generally concludes with Sky TV's model about to be devastated by internet services like Netflix.

Well, Sky TV surprised everyone with a 21 per cent gain in profit to $166 million. It boosted revenue and grew subscribers.

With our biggest telco, Spark, launching Lightbox TV and other broadband players opening the doors to Netflix in New Zealand, perhaps this year will prove to be a high tide mark for Sky. But I wouldn't bet on it.

Ideas move very fast these days, driven by the young and tech savvy on social media.

Any new trend can be extrapolated to its ultimate conclusion within minutes. Meanwhile, a large, conservative and valuable chunk of the public is much slower to change its behaviour.

Sky TV chief John Fellet is acutely aware of the fact that old habits die hard for most of the population.

He cites statistics which show that even in San Jose, the heart of tech-savvy Silicon Valley, traditional pay TV still has a hold on 95 per cent of viewers.

Social change just can't keep up with the current pace of technological change.

That creates a dilemma for companies in many industries as they seek to avoid being left behind without sacrificing crucial revenue from their existing model.

It isn't an easy balancing act because the sweet spot is different for every sector and is constantly shifting.

Spark managing director Simon Moutter is also highly attuned to this dilemma and talks about the transition from Telecom to Spark in terms of creating a business that is nimble and ready to change pace and direction as fast-moving trends dictate.

He is the first to admit that his company's $20 million investment in a digital TV service is a cautious step which is unlikely to return dividends for many years.

He doesn't want to miss the opportunity in this space but in resourcing terms Lightbox doesn't warrant anything like the focus that he will be giving to his mobile and broadband businesses.

As far as investors are concerned Spark's immediate success or failure depends on grabbing a bigger share of the mobile market and holding broadband share so it can cash in with new higher value products and services.

Get Moutter, a Breaking Bad fan, talking about TV trends and you can see he's as enthused as anyone about the subject. But he's well aware that the most exciting conversation topic in the business is not necessarily the most profitable.

- NZ Herald

Liam Dann

Business editor of the NZ Herald

Liam Dann is the Business editor of the New Zealand Herald, overseeing all our business content in print and online. He has been a journalist for 20 years, covering business for the last 14 of them. He has also worked in the banking sector in London and travelled extensively. His passion is for Markets and Economics, because they are the engine of the New Zealand economy.

Read more by Liam Dann

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